Pricing Behavior and the Introduction of the Euro: Evidence from a Panel of Restaurants in Italy
AbstractWe assemble a panel of 2,500 restaurants in Italy over the period 1998-2004 to study whether, and through which channels, the introduction of euro coins and banknotes had an impact on individual pricing behaviour. We reach three conclusions. Firstly, while the evidence rejects the hypothesis that the changeover led to a “doubling of prices” in this industry, the event may have focussed public attention on the cumulative price increases which took place before the changeover, reflecting costs and demand. Secondly, the rise in the average meal price was due more to a larger proportion of restaurants revising their prices than to large individual revisions. Lastly, more local market power (as proxied by a concentration index) was associated with a larger price increase; an interpretation of the latter finding is proposed which also explains why the effects of the cash changeover were stronger in less competitive industries.
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Bibliographic InfoArticle provided by GDE (Giornale degli Economisti e Annali di Economia), Bocconi University in its journal Giornale degli Economisti e Annali di Economia.
Volume (Year): 63 (2004)
Issue (Month): 3-4 (December)
Contact details of provider:
Postal: via Sarfatti, 25 - 20136 Milano (Italy)
Web page: http://www.gde.unibocconi.it/
Find related papers by JEL classification:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mark Bils & Peter J. Klenow, 2004.
"Some Evidence on the Importance of Sticky Prices,"
Journal of Political Economy,
University of Chicago Press, vol. 112(5), pages 947-985, October.
- Michael Dotsey & Robert G. King & Alexander L. Wolman, 1999. "State-Dependent Pricing And The General Equilibrium Dynamics Of Money And Output," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 655-690, May.
- Fabrizio Adriani & Giancarlo Marini & Pasquale Scaramozzino, 2004.
"The Inflationary Consequences Of A Currency Changeover: Evidence From The Michelin Red Guide,"
Royal Economic Society Annual Conference 2004
45, Royal Economic Society.
- Giancarlo Marini & Fabrizio Adriani & Pasquale Scaramozzino, 2003. "The Inflationary Consequences of a Currency Changeover: Evidence from the Michelin Red Guide," CEIS Research Paper 27, Tor Vergata University, CEIS.
- Columba, Francesco, 2008.
"The speed of euro adoption,"
Journal of International Money and Finance,
Elsevier, vol. 27(2), pages 249-259, March.
- Stix, Helmut, 2009. "Perceived inflation and the euro: Evidence from an Austrian survey," European Journal of Political Economy, Elsevier, vol. 25(4), pages 547-561, December.
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